Resources for Purdue Employees Approaching Retirement

Does Purdue’s Voluntary Partial Retirement Program Fit Your Retirement Plan?

Purdue’s Voluntary Partial Retirement program can provide a useful transition between working full time and retiring completely.

But from a retirement planning standpoint, working less is only part of the decision.

A reduced schedule can change a variety of areas in the retirement plan like taxable income, how much you need from your portfolio, when you claim Social Security, and how you prepare for health insurance before Medicare.

That’s why we think the more useful question is not simply, “Should I take VPR?”

“What does VPR make possible within the rest of my retirement plan?”

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Written By: Cody Lachner, CFP®, EA

Founder & Financial Advisor, Next Adventure Financial

Start With the Comparison That Actually Matters

It’s easy to compare VPR with continuing to work full time.

You work fewer hours. Your pay goes down. You retain certain Purdue benefits. Purdue also continues its regular retirement contribution during the VPR period under current program rules.

These things are helpful to know, but they don’t answer the retirement planning question.

For someone already considering retirement, we’re usually more interested in comparing:

VPR versus retiring completely at the same point in time.

If you’re financially able to retire at 62 but could transition to a reduced schedule for another year or two, the real question is what each path changes in the near-term and long-term within your retirement plan.

In a full retirement scenario, your Purdue paycheck stops. You may need to draw more from your portfolio, replace employer health coverage, decide when Social Security fits, and potentially enter a much lower-income tax period.

Under VPR, some income continues and employer health coverage may remain in place. That can reduce portfolio withdrawals and create a smoother transition while giving you a “trial run” of retirement.

Neither path is automatically better.

VPR Can Create a Small Tax Planning Window

One of the more interesting parts of phased retirement is what happens to taxable income.

For many Purdue employees, wages make up a large portion of taxable income during their working years. Moving to a reduced VPR schedule can cause that income to fall before full retirement begins.

That can create some room for tax planning.

For example, suppose your reduced Purdue income puts you in a lower tax bracket than when you were working full-time. Depending on the rest of your household income, we may evaluate whether it makes sense to intentionally recognize additional income through a Roth conversion, a withdrawal from a pre-tax retirement account, or realizing capital gains.

The amount of room may be limited. A spouse may still be working, investment income may already be filling part of the tax return, or your VPR compensation may remain relatively high.

Even so, a smaller tax planning window can still be useful when it fits into a larger retirement tax plan.

But it’s important to look beyond the VPR years themselves.

If full retirement will create several even lower-income years, it may make sense to save more of the tax planning for later. But if those years will also involve Marketplace health insurance, the VPR period can become more valuable because some tax planning may be easier to complete before those Marketplace income limits matter (more on this next).

VPR Years May Help Prepare You for Health Insurance Before 65

This is one of the situations where VPR can become much more than a reduced work schedule.

Especially for those who plan to retire completely before age 65.

Fully retiring before 65 means there’s a gap for insurance. One option is to purchase insurance through the health insurance Marketplace before Medicare. The Marketplace offers premium tax credits to help lower your premium costs; these tax credits are based in part on a household’s Modified Adjusted Gross Income, or MAGI.

That makes household income especially important during those years. I talk more about this in another article.

A large Roth conversion after leaving Purdue may look great but could ultimately reduce the amount of Marketplace premium tax credits the household receives.

VPR can sometimes provide a tax window before this health insurance-tax credit income limitation.

If Purdue wages fall because of the reduced schedule while employer health coverage continues, there may be room to complete some Roth conversions during the VPR years without having to consider Marketplace premium tax credits at the same time.

This could help build a larger pool of Roth money by the time full retirement begins.

Why does that matter?

Qualified Roth withdrawals can provide another source of retirement spending without generally increasing your gross income. That may give someone more flexibility when they’re trying to manage their household income during their Marketplace years.

Phased retirement is basically a small planning window that may help us prepare for a much larger one later into retirement.

Retirement decisions rarely happen one at a time.

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How VPR Changes the Portfolio Withdrawal Plan

Partial income from VPR may reduce how much you need to withdraw from your portfolio during the first few years of retirement.

That can be especially valuable if retirement happens to begin during a major market decline.

Someone may be financially ready to retire, have a well-built plan, and still feel uneasy about selling investments after a sharp drop. VPR can create another option. By continuing to earn some income, you may be able to reduce portfolio withdrawals and give investments more time to recover.

That can help manage sequence-of-returns risk. This is the risk that poor market returns early in retirement, combined with withdrawals, create lasting damage to the portfolio.

The important point is that VPR does not eliminate market risk. But it might give you more flexibility around when and how much you need to pull from your portfolio.

And avoiding withdrawals is not always the objective.

If VPR income covers most of your spending, there may still be reasons to intentionally take money from certain accounts for tax planning purposes.

The advantage is flexibility. Instead of being forced to sell investments or take withdrawals simply to fund spending, you may have more control over when withdrawals happen and which accounts they come from.

VPR Can Affect When Social Security Fits Best

Continued Purdue income can also change the Social Security conversation.

If VPR provides enough income to cover a meaningful portion of your spending, you may have less need to claim Social Security immediately after leaving full-time work.

That can make delaying benefits easier. Delaying can increase your future monthly benefit and, in some situations, increase the survivor benefit available to a spouse. That said, there are cases when delaying isn’t the best option.

Additionally, if you claim before full retirement age while still earning income through VPR, the Social Security earnings test may also need to be considered.

But VPR itself should not determine when you claim Social Security.

We still want to consider longevity, survivor benefits, other household income, portfolio resources, taxes, and how Social Security fits into the long-term retirement plan.

For one household, VPR may provide the bridge that makes delaying Social Security attractive.

For another, claiming earlier may still fit better.

Does VPR Actually Improve the Retirement Plan?

This is ultimately the question we’re trying to answer.

Working part time for another year or two will usually improve some financial measurements. You earn additional income. You may make fewer portfolio withdrawals. Certain benefits continue. Under Purdue’s current VPR rules, the University also continues its regular retirement contribution.

But more money does not automatically mean a better retirement decision.

If you are already financially prepared to retire, the incremental financial benefit of VPR has to be weighed against something that doesn’t appear on a balance sheet:

Your time.

That’s why we would want to compare the two paths rather than evaluate VPR in isolation.

What does the household’s after-tax income look like under each option?

How much would need to come from investments?

Does VPR create useful tax planning opportunities, or does continued income reduce a larger opportunity that would exist after full retirement?

How does health insurance change?

Does VPR make delaying Social Security easier?

And perhaps most importantly: does working longer meaningfully improve the security of the retirement plan?

For someone whose plan is tight, an extra year or two of partial income could make a meaningful difference.

For someone who already has more than enough, the financial improvement may be relatively small compared with the value they place on fully retiring sooner.

That is a very different decision.

Questions Worth Answering Before Choosing VPR

Before deciding, I’d want answers to questions like:

  • What would our income and spending look like if I retired completely instead?
  • How much would VPR actually reduce the amount we need from our portfolio?
  • Does the reduction in income create a useful tax planning opportunity?
  • Will we need Marketplace health insurance once VPR ends?
  • Could tax planning during the VPR years give us more flexibility before Medicare?
  • Does VPR change the role Social Security needs to play?
  • How much does VPR improve our long-term retirement plan?
  • And if I can already afford to retire, is the financial improvement worth giving up additional time?

VPR doesn’t necessarily need to improve every part of the plan but you still need to understand what you gain, what you give up, and whether the tradeoff fits the retirement you actually want.

Want a Second Set of Eyes on Your Retirement Plan?

Retirement decisions shouldn’t be made in isolation.

The timing of your Purdue retirement can affect taxes, portfolio withdrawals, healthcare, Social Security, and the amount of income you’ll need from your investments. A decision that looks good in one area can create tradeoffs somewhere else.

We specialize in working with folks age 50+ who are approaching retirement or already retired. Our job is to help coordinate every part of the retirement plan, not just manage the investments.

If you’re curious to see where you stand today, what areas may deserve more attention, and how we may be able to help, our Retirement Review is a good place to start.

Start Your Retirement Review

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Written by Cody Lachner, CFP®, EA
Founder & Financial Advisor, Next Adventure Financial

Next Adventure Financial is an independent investment adviser and is not affiliated with or endorsed by Purdue University.

Last reviewed: August 2026

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